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Incentives for use of electronic health records

Table of Contents

Looks like 2011 will be a year of focus on electronic health records (EHR, also called “electronic medical records” or EMR). As part of the economic stimulus package, Congress enacted the “Health Information Technology for Economic and Clinical Health Act”—a cumbersome name that allows lawmakers to refer to the new law by the acronym “HITECH.” The act creates financial incentives for health care providers to utilize electronic health records.

Eligibility of providers

Funding of incentives for providers began in January 2011. Under federal regulations issued to implement the act, payments under the Medicare and Medicaid programs are available to hospitals and “eligible professionals.” Eligible professionals include: doctors of medicine, doctors of osteopathy, dentists, and certain other professionals, the category of which varies depending on whether the other professionals seek incentive payments under Medicare or Medicaid.

Hospital-based professionals—those who perform at least 90 percent of their services in a hospital in-patient area or emergency room— are not eligible for the incentive payments.

To be eligible for incentive payments under the Medicaid program, the professional’s Medicaid patient volume must be at least 30 percent (20 percent for pediatricians), or 30 percent of the patient volume must be of needy patients at a Federally Qualified Health Center or Rural Health Center.

Eligible professionals may obtain payments under only one program—Medicare or Medicaid—although a professional may switch from one program to another once between 2011 and 2015. Hospitals may obtain payments from both programs.

Amount of payments for using Electronic Health Records

Payments to providers will be made annually. Under the Medicare program, a professional can receive as much as $44,000 over a five-year period, plus a 10 percent annual bonus if the professional furnishes services predominantly in an area designated as a Health Professional Shortage Area (HPSA). To obtain the maximum amount, Medicare eligible professionals must begin participation by 2012. Professionals receiving payments under the Medicare program must demonstrate actual use of the EHR. (“Meaningful use” of EHR is described below.)

Under the Medicaid program, the maximum amount is $63,750 over six years. Medicaid-eligible professionals may receive payments as of 2011 if their state is able to certify the professional’s eligibility. Unlike the Medicare program, initial payments under the Medicaid program do not require actual use of EHR. Rather, it is sufficient to show a contract that an EHR investment will be made.

The Centers for Medicare & Medicaid Services (CMS) has announced that 14 states are ready to register professionals for the Medicaid program as of February 2011.  Those states are: Alaska, California, Iowa, Kentucky, Louisiana, Michigan, Mississippi, Missouri, North Carolina, North Dakota, Oklahoma, South Carolina, Tennessee, and Texas. CMS expects the remainder of states to be ready by summer.

The amount of payments to hospitals will be based on a number of factors, and $2 million will be considered a “base payment” to a hospital.

In 2015, the program will change—with carrots being replaced by sticks. The incentive program will be over (or almost over), and providers who have not implemented EHR will have their reimbursements from Medicare and Medicaid reduced.

Requirement of “meaningful use” of EHRs

In order to receive payments under the incentive program, providers must demonstrate what the regulations call “objectives and associated measures” that demonstrate “meaningful use” of electronic health records. The criteria are divided into three stages.

Stage 1 involves capturing information in a coded form, communicating that information for care coordination purposes, and initiating the reporting of clinical quality measures. Examples of data included in Stage 1 are: patient demographics, recording and charting changes in patient vital signs, up-to date problem list, active diagnoses, medication list, medication allergies and ambulatory clinical quality measures.

In Stage 1, eligible professionals also are supposed to use certified EHR technology to transmit at least 40 percent of prescriptions if the professional writes 100 or more prescriptions during an EHR reporting period. (An EHR reporting period is any continuous 90-day period during the provider’s first year of participation and the full calendar year thereafter.)

Stage 2 will expand on Stage 1 criteria in the areas of disease management, clinical decision support, transitions in care, quality measurement, and bi-directional communication with public health agencies. Stage 3 will provide added focus on improved quality, safety, efficiency, patient self-management tools, and support for national high priority conditions. Details of the criteria for  Stages 2 and 3 will be specified by CMS at a later time.

EHR use becoming more common

The Centers for Disease Control and Prevention reports that as of 2010, a majority (50.7 percent) of officebased physicians reported using EHR. About 24.9 percent had a “basic system” and 10.1 percent a “fully functional system.” The level of adoption varied significantly by state, ranging from a high of 80.2 percent in Minnesota to a low of 38.1 percent in Kentucky.

Tips for establishing EHR

For those involved in implementing EHR, the College of Healthcare Information Management Executives and the Health Research & Educational Trust (an affiliate of the American Hospital Association) offer the following advice:

  • Keep the entire organization involved and informed. Involvement of physicians is particularly important.
  • Be prepared for substantial expenditure of time and capital.
  • Have visible backing from top leadership.
  • Evaluate each major process—such as prescription writing, medication refills and recording patient information—noting each step on a flow diagram.
  • Have extra IT staff and project team members available to help with the new system.
  • Emphasize the benefits of EHR, including improved efficiency, improved continuity of care, protecting patients from harm, reduced malpractice exposure, and better work/life balance.

The report on implementing EHR advises: “If a group believes the specific technology effectively supports values that are significant to it, the group is more likely to support that technology.”

The full report, “Health Care Leader Action Guide on Implementation of Electronic Health Records,” is available here. For more information about the EHR incentive program, including application information, click here.

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